The CLARITY Act remains stuck in the Senate as lawmakers try to resolve an ethics-related disagreement, with September offering only a brief opportunity to move the legislation forward.
In the latest CLARITY Act update, the Digital Asset Market Clarity Act is still a proposed bill rather than federal law. The House passed it 294-134 in July 2025, but the Senate had not scheduled a floor vote or initiated a cloture process before lawmakers left for the August recess.
The Senate adjourned without voting on the crypto market-structure legislation, leaving lawmakers with less time to act ahead of the midterm elections.
Senate Majority Leader John Thune has indicated that the bill could reach the Senate floor in September. However, lawmakers will return for only about three weeks before departing Washington for campaign activities. The legislation will therefore have to compete with several other priorities, while negotiators work to resolve the issues that have prevented it from advancing.
Prediction markets including Kalshi have lowered the odds of the bill passing in September to 8%, compared with 10% the previous day. In a market with $6.7 million in trading volume, 54% of participants are betting that the legislation will pass by July 1, 2027.
CLARITY Act Moves From House Victory to Senate Stalemate
The House approved the CLARITY Act with significant bipartisan backing. The Senate Banking Committee subsequently moved forward with its version, receiving support from two Democrats. The legislation became eligible for Senate floor consideration in June 2026 and stayed on the Legislative Calendar during the first half of the year before being shelved in late July.
The proposed framework would establish legal definitions separating digital commodities from securities and divide regulatory responsibilities between the CFTC and SEC.
Spot markets for digital commodities would primarily fall under CFTC oversight, while the SEC would continue supervising digital assets that qualify as securities.
The legislation would establish registration frameworks for digital asset exchanges, brokers, dealers and custodians. Regulatory agencies would be tasked with setting requirements involving registration, capital, custody and business practices.
The proposal also includes a self-certification mechanism for networks that satisfy defined maturity standards. It would protect non-custodial software developers from being classified as money transmitters and establish federal precedence over conflicting state regulations covering eligible assets and intermediaries.
Passing the CLARITY Act through the Senate would require 60 votes to overcome a filibuster. A major sticking point in negotiations has been an ethics provision addressing federal officials involved in issuing or sponsoring digital assets while in office.
Republicans unveiled revised language on July 22 that would bar federal officials, including the president, from issuing or sponsoring digital assets during their time in office. Violations could result in fines of as much as $250,000 per day, while the provision would expire on Jan. 20, 2029.
Democrats opposed the proposal because enforcement would be handled exclusively by the Justice Department. They have instead called for state attorneys general to receive independent enforcement authority, a provision excluded from the Republican-backed language. Both Democrats who supported the bill in committee rejected the revised version.
Sen. Cynthia Lummis remains involved in negotiations over the legislation. Discussions continue to focus on reaching an agreement over the ethics provision before the Senate takes up the bill.
September Gives CLARITY Act Little Room to Advance
September could provide the Senate with one of its final opportunities to advance the CLARITY Act this year. The legislation will compete with appropriations deadlines and other priorities for limited floor time, while a Senate-approved version would still need to be reconciled with the House.
Ian Katz, managing partner at Capital Alpha, told The Hill that the bill faces increasing challenges as September approaches. With only a handful of legislative days and competing priorities, Katz said the legislation is not necessarily finished but its prospects appear weak.
Another possibility is a year-end push to attach the CLARITY Act, or portions of it, to must-pass legislation such as government funding measures or the defense authorization bill. Lobbyists have reportedly discussed the strategy, although no senator has confirmed it. Such an approach would also leave the central disagreements over Senate support and enforcement unresolved.
